Bharat Wire Ropes Ltd. (BHARATWIRE) - Director Report

Company director report

The Directors of your Company are pleased to present the 31st Annual Reportand the Audited Financial Statements for the Financial Year ("F.Y.")ended March 31 2017.

1. FINANCIAL PERFORMANCE

The performance of the Company is summarized below:

Particulars

2016 - 17

2015 - 16

Income from Business Operations

648286550

607028472

Other income

32494335

-

Total Revenue

680780885

607028472

Profit before Interest Depreciation and

94467239

82306115

Taxes

Less: Interest

25419823

37214014

Less: Depreciation

38852021

22917158

Profit before Tax

30195395

22174943

Less: Extra-ordinary Item (Goodwill

-

-

Written Off)

Less: Current Income Tax

8994874

7463897

Less: Minimum Alternative Tax Credit

(8994874)

-

Entitlement

Less: Deferred Tax

13799870

1283324

Profit after Tax

16395525

13427721

2. HIGHLIGHTS OF THE FINANCIAL SUMMARY

The total revenue of the Company for F.Y. 2016-17 at Rs. 680780885/- was higher by12.15% over the previous years revenue (Rs. 607028472/-). The profit after tax of thecompany was Rs. 16395525/- 22.10% higher that the previous year profit after tax (Rs.13427721/-).

3. STATE OF AFFAIRS OF THE COMPANY'S

Bharat Wire Ropes Limited ("BWR" or "the Company") isone of the largest manufacturers of Wire Wire Ropes Stranded Wires and Slingsin Indiawith an increasing global presence catering more than 20 countries globally. The Companyexports its varied products to USA Singapore Australia South Africa Kuwait NewZealand Vietnam Bangladesh and Nepal. The Company is committed to increase itsefficiency and productivity. The

Company has commenced production on March 22 2017 at Chalisgaon Plant which isexpected to yield immense benefits in the years to come.

4. SHARE CAPITAL

The paid-up Share Capital of the Company as on March 31 2017 was Rs. 449522480consisting of 44952248 Equity Shares of Rs. 10 each. The shares of the Company arelisted on the National Stock Exchange of India Ltd. and BSE Limited since April 1 2016.During the F.Y. there was no change in the capital structure of the Company.

5. RESERVES AND DIVIDEND

The Company proposes to transfer an amount of Rs. 16650109/- (Rupees One Crore SixtySix Lakh Fifty Thousand One Hundred and Nine ) to reserves for its future growth anddiversification.

With a view to conserve the resources of the Companyyour Directors do not recommendpayment of any dividend on Equity Shares for the F.Y. ended March 31 2017.

6. MEETINGS OF THE BOARD

During the period under reviewthe Board of Directors met

5 (Five) times viz. on May 29 2016 August 10 2016 November 12 2016 January 62017 and February 11 2017 the additional details of which are given in the CorporateGovernance Report annexed herewith.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Mayank Mittal (DIN: 00127248) was appointed as an Additional Director of theCompany on November 12 2016 and was subsequently appointed as a Joint Managing Directorof the Companyvide Ordinary Resolution passed through Postal Ballot dated March 242017.Mr. ShivKumar Malu (DIN: 05345172) was appointed as an Additional Director(Non  Executive Independent) of the Company w.e.f. February 15 2017 and isrecommended for appointment as an Independent Director at the ensuing Annual GeneralMeeting ("AGM").

Mr. Mahender Singh Arora was appointed as the Chief Executive Officer of the Companyw.e.f. August 19 2016 by the Board of Directors at its meeting held on August 10 2016.

8. DIRECTOR RETIRING BY ROTATION

In accordance with the provisions of the Companies Act 2013 ("theAct")and in terms of the Memorandum and Articles of Association of the Company Ms. Ruhi Mittal(DIN: 07159227) is liable to retire by rotation at the ensuing AGM and beingeligible has offered herself for re-appointment. Her re-appointment is being placed foryour approval at the AGM. The Members of the Company may wish to refer to the accompanyingNotice of the AGM of the Company for a brief Resume of Ms. Mittal.

9. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received declaration from all the Independent Directors under Section149(7) of the Act stating that they meet the criteria of independence laid down inSection 149(6) of the Act.

10. EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92 of the Act read with Rule 12 of the Companies(Management and Administration) Rules 2014 the extracts of Annual Return in Form MGT-9is annexed as Annexure A' to this Report.

11. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Act the Board of Directorsto the best of their knowledge and ability submits that:

(a) In the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(b) The directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;

(c) The directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis;

(e) The directors had laid down internal financial controls to be followed by thecompany and those internal financial controls were adequate and were operatingefficiently; and

The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

12. AUDITORS Statutory Auditors

M/s. Sureka Associates Chartered Accountants Mumbai (Firm Registration No.: 110640W)were appointed as the Statutory Auditors of the Company at the 29thAnnualGeneral Meeting to hold office until the conclusion of the 34th Annual GeneralMeeting subject to ratification by the Members at every Annual General Meeting. M/s.Sureka Associates being eligible have expressed their willingness to continue as thestatutory auditors of the company and accordingly your Directors seek ratification for theappointment of the statutory auditors for the financial year 2017-18.

There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Sureka Associates Chartered Accountants in their Report dated May 27 2017 on theFinancial Statements of the Company for F.Y. 2016-17.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedM/s. Abhishek Lakhotia and Co.Practicing Company Secretaries to undertake theSecretarial Audit of the Company for the F.Y. ended March 31 2017. The Secretarial AuditReport is annexed as Annexure B'.

There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Abhishek Lakhotia and Co. Practicing Company Secretaries in their Secretarial AuditReport dated May 23 2017 on the Secretarial and other related records of the Company forF.Y. 2016-17.

Pursuant to Section 178 of the Act the Board has devised Board Diversity andRemuneration Policy for determining director attributes and remuneration of Directors KeyManagerial Personnel and Senior Management Employees. The Nomination and RemunerationPolicy has been framed to encourage diversity of thought experience knowledgeperspective age and gender in the Board and to ensure that the level and composition ofthe remuneration of Directors Key Managerial Personnel and all other employees arereasonable and sufficient to attract retain and motivate them to successfully run theCompany. The said Policy is attached as Annexure C' to the Boards' Report.

14. PERFORMANCE EVALUATION OF BOARD COMMITTEES AND DIRECTORS

The evaluations for the indivisual Directors the Board as a whole and the Committeesof the Board were undertaken by the Board of Directors. The performance of the Board wasassessed on select parameters related to roles responsibilities and obligations of theBoard and functioning of the Committees including assessing the quality quantity andtimeliness of flow of information between the company management and the Board that isnecessary for the Board to effectively and reasonably perform their duties. The evaluationcriteria for the Directors were based on their participation contribution and offeringguidance to and understanding of the areas which were relevant to them in their capacityas members of the Board. The evaluation of Committees were based on Contribution todecisions of the Board Independence of the Committee from the Board Effectiveness of theCommittee etc.

15. BUSINESS RISK MANAGEMENT

The Company has laid down Risk Management Policy to identify risks inherent in thebusiness operations of the Company which provides guidelines to define measure reportcontrol and mitigate the identified risks. An enterprise-wide risk management framework isapplied so that effective management of risks can be done. Risk is an integral part ofevery employee's job. The Audit Committee and Risk Management Committee plays an importantrole in evaluation of the risk management systems.The Policy is devised for identificationof elements of risks and procedures for reporting the same to the Board. The Board reviewsthe business plan at regular intervals and develops the Risk Management Strategy whichshall encompass laying down guiding principles on proactive planning for identifyinganalyzing and mitigating all the material risks both external and internal viz.Environmental Business Operational Financial and others.

16. CORPORATE SOCIAL RESPONSIBILITY

The Company does not fall under the criteria of undertaking Corporate SocialResponsibility activities as per the section 135 of the Act.

17. PARTICULARS OF LOANS GUARANTEES OR

INVESTMENT

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the Notes to the financial statements provided in this Annual Report.

18. PARTICULARS OF CONTRACTS OR

ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered and executed during the year underreview were at arms' length basis. None of the transactions with related parties fallsunder the scope of section 188(1) of the Act. Thus disclosure in form AOC-2 in terms ofSection 134 of the Companies Act 2013 is not required

19. VIGIL MECHANISM

The Company has established a Vigil Mechanism for its Directors and employees to reporttheir genuine concerns or grievances. The said mechanism encompasses the Whistle BlowerPolicy and provides for adequate safeguards against victimization of persons who use themechanism. It also provides direct access to the Chairman of the Audit Committee inappropriate and exceptional cases. The Vigil Mechanism and Whistle Blower Policy areavailable on the Company's website.

20. DETAILS REGARDING BHARAT WIRE ROPES

LIMITED EMPLOYEE STOCK OPTION PLAN 2017 ("BWR ESOP 2017")

The Company has formulated the Bharat Wire Ropes Limited Employee Stock Option Plan2017 ("BWR ESOP 2017") for grant of Stock Options to certain employees of theCompany. BWR ESOP 2017 was approved by the Members pursuant to the Special Resolutionpassed through Postal Ballot. However there was no grant of option in F.Y. 2016-2017.

21. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There were no significant/material orders passed by the regulators or courts ortribunals impacting the going concern status of your Company and its future operations.

The information pertaining to conservation of energy technology absorption ForeignExchange Earnings and outgo as required under Section 134 (3)(m) of the Act read with Rule8(3) of the Companies (Accounts) Rules 2014 is as under:

(A) Conservation of Energy:

Steps taken for utilizing alternate source of energy: The Company has taken everynecessary step for conservation of energy by installing LED lights at plant buildings andoffices which consumes 80% lesselectricity as compared to the traditional lightingarrangements. Energy efficient utility equipment like pump and Compressor are controlledby Variable frequency drives which saves 20 to 30 percent electricity.

Steps taken for conservation of energy:

The Company has installed Energy efficient transformer inorder to reduce the lossforpower transformation on our projects. Total loss (no load loss and full load loss) isreduces to 1% from 3%.Automatic power factor panel has been installed to control powerfactor automatically. The Company receives 8% incentive p.a.on its total bill by theElectricity Board.

(B) Technology Absorption:

There have been no technology changes in the company during the year under review butcompany is under process to bring technological revolution by installing high endtechnology for its new plant in MIDC Chalisgaon Maharashtra.

(C) Foreign exchange earnings and Outgo:

Sr. No.

Particulars

2016-2017

2015-2016

1.

Foreign Exchange Earnings

36063641

32790308

2.

Value of Direct Import (C. I. F Value)

1264372928

680410076

3.

Expenditure in Foreign Currency

49342450

3329197

23. COMPLIANCE WITH PROVISIONS OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:

The Company is committed to uphold and maintain the dignity of women employees and anInternal Complaints Committee has been formed for each location of the Company under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

The Company has framed Sexual harassment policy to prevent sexual harassment of womenat work place. No case of Sexual harassment was reported to the Internal ComplaintsCommittee during the year under review.

24. PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow.

The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the Financial Year 2016-17:

Name of the Directors

Ratio to the median

Remuneration

Non-Executive directors

N.A. as they have only received sitting fees for attending meetings of the Board and its Committees during the Financial Year 2016-17

Executive directors

Mr. Murarilal Mittal

22.16

(Managing Director)

*Mr. Mayank Mittal

--

(Jt. Managing Director)

Mr. Sushil R. Sharda

11.69

(Whole-Time Director)

Mr. Sumit Kumar Modak

12.94

(Whole-Time Director)

Mr. Venkateswararao Kandikuppa

8.27

(Whole-Time Director)

*Ratio of Remuneration of Mr. Mayank Mittal is not reported since he was holdingDirectorship for the part of the financial year.

(i) The percentage increase in remuneration of each Director Chief ExecutiveOfficer Chief Financial Officer Company Secretary in the financial year:

Directors Chief Financial Officer and Company Secretary

% increase in remuneration in the financial year

Non-Executive directors

N.A. as they have only received sitting fees for attending meetings of the Board and its Committees during the Financial Year 2016-17

Mr. Murarilal Mittal

71.21

(Managing Director)

*Mr. Mayank Mittal

--

(Jt. Managing Director)

Mr. Sushil R. Sharda

27.78

(Whole-Time Director)

Mr. Sumit Kumar Modak

22.59

(Whole-Time Director)

Mr. Venkateswararao Kandikuppa

(10.98)

(Whole-Time Director)

**Mr. Mahender Singh Arora

--

(Chief Executive Officer)

Mr. Rakesh Kumar Jain

13.23

(Chief Financial Officer)

Mr. Shailesh Rakhasiya

72.38

(Company Secretary &

Compliance Officer)

*Mr. Mayank Mittal was appointed as Joint Managing Director of the Company w.e.f.November 12 2016 therefore increase in the remuneration is not reported.

**Mr.Mahendar Singh Arora was appointed as CEO of the Company w.e.f. August 19 2016therefore increase in the remuneration is not reported.

(ii) The percentage increase in the median remuneration of employees in thefinancial year:

Particulars

2015-2016

2016-2017

% Increase

(Rs.)

(Rs.)

Median remuneration of all employees per annum

227918

254964

11.87

(iii) The number of permanent employees on the rolls of Company: There were 515(Five Hundred and Fifteen)permanent employees as on March 31 2017.

(iv) Average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and point outif there are any exceptional circumstances for increase in the managerial remuneration:

The average increase in the salaries of employees excluding Managerial PersonnelduringFinancial Year 2016-17 was 4.43%. The average increase in the Remuneration of ManagerialPersonnel during the Financial Year 2016-2017 was 29.04%. The increase in the remunerationof Managerial Personnel was due to the increase in the remuneration of Managing Directorand Whole-Time Director which was based on Company's Performance and their IndividualPerformance.

(v) Affirmation that the remuneration is as per the remuneration policy of theCompany:

The Company affirms remuneration is as per the remuneration policy of the Company.

25. MATERIAL CHANGES AND COMMITMENTS

There are no material changes or commitments affecting the financial position of theCompany which have occurred between March 31 2017 and May 27 2017 being the date ofthis report.

26. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCETO THE FINANCIAL STATEMENTS

The Company has a robust internal control system commensurate with the size and scaleof its operations.

Roles and responsibilities are clearly defined and assigned.

Standard operating procedures are in place by way of built in controls in ERP systemand have been designed to provide a reasonable assurance. A reputed CA firm has also beenengaged for internal audit covering all units and business operations. The AuditCommittee reviews the adequacy and effectiveness of internal control systems and providesguidance for further strengthening them. Apart from having all policies procedures andinternal audit mechanism in place your Company also periodically engages outside expertsto carry out an independent review of the effectiveness of various business processes. Theobservations and good practices suggested are reviewed by the Management and AuditCommittee and appropriately implemented with a view to continuously strengthen internalcontrols.

27. ACKNOWLEDGEMENT

The Board of Directors place on record their sincere thanks to its bankers businessassociates consultants and various Government Authorities for their continued supportextended to your Company during the year under review. The Directors gratefullyacknowledge the support and confidence reposed by the shareholders on your company.